Evan Schuman's StorefrontBacktalk

Because a great deal of Amazon’s traffic comes through affiliates, the new rule is likely to have played a big part in making wine look less profitable to Jeff Bezos and company, Perdue said. “I think they were counting on all of the tens of thousands of wine bloggers and writers picking up on the affiliate program and popping up links to make a buck or 50 cents on each bottle sold,” he said. “That was going to go away and the inability for them to use a proven, successful promotional system probably was one more piece of the backdrop. This just steadily accreted to the point that they looked at it and said it just is not going to be possible to get a comfort level with this like we can with power saws and books.”

Perdue also cited the company’s probable fear of legal action and its uncertainty that NVL could live up to Amazon’s strong reputation for speedy and accurate delivery.

“I think that the closer Amazon got to throwing the switch and opening this up to commerce, the more their feet got cold because, at the end of the day, no matter how good a third-party logistics company might be, Amazon is the big wallet at the end of the legal chain,” Perdue said. “I think they were convinced something was going to go wrong and they were going to end up liable and quite possibly not be able to fulfill customer orders with the same degree of confidence they have demonstrated well in other areas.”

Amazon’s retreat from online wine sales was also analyzed in a blog posting by Jeff Carroll, vice president of compliance at ShipCompliant.com, a company that “sells compliance software for wineries, wine retailers and importers to comply with local and state wine and liquor regulations.” He wrote that “the prospect of Amazon’s wine site sent a wave of excitement throughout the industry as small and medium sized domestic brands with limited distribution saw an opportunity to get exposure through Amazon’s enormous book of active customers.”

Carroll also wrote that foreign wine sellers would have really benefitted from the Amazon effort because imported brands “don’t have the same rights to ship wine directly to consumers as U.S.-produced brands do” and the Amazon program might have been a way around that roadblock. “Because of the large number of brands (6,000+ wineries in the United States alone) and labels that exist in the world, the wine industry seemed ripe for an aggregator like Amazon to come in and help consumers discover and purchase wines that they otherwise couldn’t find in their local wine shops and restaurants,” noted Carroll. “Sites like Amazon and the Apple iTunes Store are great platforms for exposing the “long tail” of industries that have large selections.”

However, as did Perdue, Carroll pointed to the special hassles of distributing wine on a multi-state basis thanks to the 21st Amendment, which gives states the power to regulate alcohol distribution.

“This system has led to a hodgepodge of antiquated laws that are very different from state to state,” Carroll wrote. “Much of the existing legislation that regulates the sale and distribution of alcohol was written at a time when lawmakers had no vision for today’s technology that allows for automated payments, electronic title and funds transfers, real-time compliance checks and online age verification. Because of the conflict between available technology and written law, alcohol regulators are often put in a tough position when the time comes to establish administrative policy and to enforce their statutes.”

Perdue pointed out that “many people are saying nobody can do it if Amazon can’t,” but he doesn’t buy that argument. “It’s probably true that nobody will ever be able to do it, with wine, as reliably as Amazon does it with the products it does sell,” Perdue said. “The companies that are doing it do an excellent job. But because of the inherent uncertainties in shipping within a complicated compliance environment, they might not always be able to guarantee delivery within a guaranteed time envelope.”